In July, we received a preliminary estimate on economic growth in the second quarter -- April, May, and June of this year -- that was clearly underwhelming. Today, that number was revised up in a heartening direction.
The U.S. economy grew at a 2.5% annual rate in the second quarter instead of 1.7% as previously estimated, largely because of an improved trade picture, the Commerce Department said Thursday. Economists polled by MarketWatch had expected gross domestic product to be revised up to 2.3%, mainly because of a smaller U.S. trade gap. Even faster growth in exports and a somewhat slower increase in imports largely accounted for the bump in GDP. Companies also restocked warehouse shelves a bit faster than previously believed.
This is not to say 2.5% GDP is evidence of a robust economic recovery; it's not. But just a few months ago, many believed growth in the second quarter would barely exist at all, so given these low expectations, modest growth looks more encouraging.
Whether the third quarter will improve on this figure is unclear -- most believe it's unlikely -- and with congressional Republicans talking up the possibility of a government shutdown and a debt-ceiling crisis, don't be too surprised if GOP officials serve as a drag on the economy in the coming months.
Also note, though 2.5% is a step in the right direction, the figure would be even better had it not been for reductions in government spending.
As for the image above, the chart shows GDP numbers by quarter since the Great Recession began. The red columns show the economy under the Bush administration; the blue columns show the economy under the Obama administration.